Christmas is fast approaching and if you’re like me you’ll be wondering where the year has gone, and what new exciting gifts you can buy your loved ones. If lenders are feeling festive and want to give intermediaries a present for 2013, here is our Christmas wish list.
No shifting of goalposts
Lenders sometimes add to a shopping list after an applicant’s documentation has been provided. This shifting of goal posts frustrates mortgage brokers. While it is expected that documentation can generate further questions or requirements some lenders seem to add unrelated further requirements during the late stages of an application, or often a completely different underwriter will review the case and ask for a different shopping list. To minimise frustrations increased clarity of the requirements could be provided upfront. This will help brokers to effectively manage the expectations of their clients and their mortgage journey, and minimize time wastage. Plausibility and background checks is something that my fellow Buy-to-letwatch columnist, Mortgages for Business managing director David Whittaker, discussed at length in his last article.
The number of products and the arrival of new lenders in the buy-to-let market space has been one of the big positives in 2012. However many of the lenders and products are looking at the same safe vanilla area. The current market will provide 75 per cent for a three bed semi detached property in leafy Surrey. The property will be rented to a professional family and the landlord will have a few buy-to-lets, an unblemished credit history and a strong income from a white collar job.
It would be nice to see higher LTVs, more products for the HMO/student market, light refurbishment products, limited company product range and other niche areas that are currently underserved.
Common sense underwriting
Current controls and processes should ensure that the mortgage industry doesn’t return to the early days of irresponsible lending. Underwriters should continue their efforts towards a common sense approach of buy-to-let lending, with a greater understanding of the mechanics and drivers of the buy-to-let investment. Deals which are refused because the computer says no, can be frustrating. This is still a people’s business and whilst technology can perform many of the tasks, a commercial mind with a human touch still needs to be the ultimate decision-maker.
Flat fee products
When competition in the market place was weak and clients had fewer options lenders could charge large percentage fees. However with more choice available for landlords now, we have seen a fall in the number of percentage arrangement fee products. We encourage lenders continue this trend into 2013.
Cater for large landlords
Recent research by BDRC Continental shows that arrears levels are lower among larger landlords who run their portfolio as a business. Yet despite these impressive results, this class of landlords continues to be neglected by lenders. Lenders need to differentiate between large landlords who have built, low geared and high yielding profitable portfolios and landlords who have built up portfolios quickly using no money down techniques.
This is my last Buy-to-letwatch of 2012 so I would like to take this opportunity to thank you for following my column and to wish you all a Happy Christmas and a Prosperous New Year.